Offsetting vs Insetting

Grace Reddish

It’s all about carbon removal.

At least 197 countries across the globe have agreed that removing carbon out of the atmosphere must happen. 

In the most recent COP 28 summit, it was agreed that countries had to transition away from fossil fuels. In a world heavily reliant on fossil fuels how is that even possible? Especially when countries have set targets to hit ‘Net Zero’, which in turn means businesses must find a way to carbon neutrality.

From the multinational organisations, with vast supply chains and huge manufacturing facilities, to the small business owner – what are the options that enable action to be taken? 

In the beginning, there was carbon offsetting, but the more impactful and better option is seen as carbon insetting.

But what is the difference between the two?

Carbon Offsetting

Businesses who run heavy carbon emitting production lines or supply chains, to those who are searching for ways to reduce their impact on the environment, can do so by offsetting their unavoidable emissions by investing in projects, or better known as investing in carbon credits.

Examples could be the carbon emitting company purchasing credits that actively invests in other organisations that work on reducing carbon emissions: such as a company building a solar farm, a reforestation project or a coastal restoration program.  

Although many of these projects help protect forests and wildlife, it is hard to measure the direct impact on the carbon that is being released. In all of the examples, these are external to the companies activities, which means they can continue with ‘business as usual’ without reducing their own emissions, and in some cases could even increase their emissions!

To actively make a difference to the climate there has to be an alternative approach that creates more accountability by carbon emitting organisations and their impacts on the environment. 

In steps carbon insetting…

Carbon Insetting

Carbon insetting: doing more good rather than doing less bad within one’s value chain, a term coined by the World Economic Forum.  

Instead of investing in projects outside of a businesses value or supply chain, the focus is on projects within the value chain. For businesses to align with the science of climate change, making direct emissions reductions within their own operations and value chain is key. 

Carbon insetting is achieved through implementing nature-based solutions like reforestation, renewable energy, agroforestry, and regenerative agriculture.

The first step is to understand where the emitting hotspots are and take measures to reduce those. For many businesses this is energy used and so investing in renewable energy technologies to reduce the consumption would be a good place to start.

Implementing these practices not only reduces the total amount of emissions created, but can have a positive impact on a business’s local community, ecosystem and landscape.

Benefits of Insetting

  • Enhances sustainability strategies – allows companies to directly reduce their carbon emissions, creating emission reduction at the source, whilst helping meet their targets. 
  • Strengthens supply chain resilience – working and collaborating with suppliers and customers to strengthen longer-term relationships with those that are committed to sustainable practices.
  • Compliance and reporting – help organisations’ meet regulatory requirements and ensure they can prove their carbon reductions to ensure there is no greenwashing and demonstrating compliance with carbon reduction targets.
  • Competitive advantage – insetting can help your brand image for an increasingly environmentally conscious consumer base, which can boost innovation within organisations and leading to new products, processes, or services that are more sustainable providing a key differentiator in the market.

 

The path to carbon reduction will take time and today the most accessible option could be carbon offsetting. The key is in planning for the future and focusing on those emissions that can be reduced within the organisation, which often starts with reporting. Finding those hotspots can unlock a more strategic sustainable path to carbon insetting.

Sharing our knowledge

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